Japan lost its position as the world’s second-biggest economy to China awhile ago. But it’s beating out its Asian rival in one area at least: private equity. For restructuring experts such as KKR & Co. LP, whose founders recently declared Japan the company’s “highest priority” outside the US, the smaller country offers much more attractive opportunities. And the reasons are as much political as financial.
That might seem surprising, given that the Chinese market dwarfs Japan’s. (Private equity investment value in greater China, including domestic yuan funds, averaged US$72bil annually in the past five years, compared to just US$9bil in Japan.) The mainland features growth companies galore and easy exit opportunities through initial public offerings in Hong Kong, the US and soon, for tech firms, Shanghai.
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